Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) has called off an agreement with construction companies Electra Ltd. (TASE: ELTR) and Tidhar Group for the construction of a new campus in Ra'anana, sources inform "Globes." Digging work on the site, which had already begun, was suspended several months ago, following the downturn in Teva's results and its need to service the company's large debt. Since then, Teva has said that it was considering renewing the work for construction of its headquarters on a more limited format. Income-producing real estate market sources, however, believe that instead of renewing work on the site, Teva will sell the lot, for which a permit for digging and buttressing work has already been issued.
Teva bought the lot from Toyota importer George Horesh for NIS 200 million in 2015. One possibility is that Amdocs Ltd. (Nasdaq: DOX), which is looking for a site to build a new campus in the area, will buy the land.
The 55-dunam (13.75-acre) site is locate in the northern Ra'anana industrial zone. Horesh bought it from Comverse Inc. (Nasdaq: CNSI) in 2010 for NIS 106 million. There were approved rights for construction of 90,000 square meters on the land.
Horesh sold 11 dunam (2.75 acres) of the lot to SAP for NIS 40 million in 2013. SAP built a building on the site with seven stories and 15,000 square meters of space. Teva bought the remaining 44 dunam (11 acres) from Horesh with rights to build 75,000 square meters, planning to build its new headquarters and concentrate its business there, currently located in several buildings, mainly in Petah Tikva, but also in Netanya and Rehovot. After signing an agreement with Electra and Tidhar in March 2016, Teva announced that it would invest an estimated NIS 1.3 billion in the project, which would take four years to build, and would accommodate 3,000 employees. Moving Teva's headquarters from Petah Tikva to Ra'anana was part of the company's planned streamlining measures, and would have saved the company several million dollars in rent that it pays on its current properties.
As a result of the economic challenges that Teva now faces, however, it is believed that it will not renew construction on the site after canceling its agreement with Electra and Tidhar, and will put the lot up for sale.
Published by Globes [online], Israel Business News - www.globes-online.com - on August 6, 2017
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